The European Council for an Energy Efficient Economy has just published an important new report on one of the important elements of the EU Energy Efficiency Directive: mandatory energy audits for large enterprises.
A new eceee review of EU’s mandatory energy audit schemes points at improvements that would help make EU industry more competitive. The report, by Fraunhofer ISI, shows how a focus on company energy demand rather than company size, as well as a more uniform implementation of the audit requirements could create a more level playing field while improving overall competitiveness.
Energy intensive industries typically have a large cost-effective energy savings potential, but many fall short of realising this potential. This is the main rationale for Article 8 of the EU Energy Efficiency Directive (EED). In short, Article 8 requires Member States to establish mandatory energy audit schemes to help large enterprises identify cost effective measures. Article 8 also spells out non-mandatory actions for small and medium-sized enterprises, SMEs.
The new report, Enhancing the impact of energy audits and energy management in the European Union, explains how a focus on companies’ energy demand rather than their size, as well as a more uniform implementation of the requirements could create a more level playing field while improving overall competitiveness.
Energy demand in industry represents ~40% of the EU’s total final energy consumption including the buildings in those sectors. Within the industry, energy demand is dominated by the energy intensive industries (including food industry), which are responsible for nearly 80 % of industry’s final energy demand.
Multiple benefits boost profitability of efficiency investments
Further, the new report refers to the positive effects of energy efficiency that go far beyond energy savings. In industry, the most prominent of these multiple benefits is increased productivity. According to the International Energy Agency (IEA), the monetary value of those multiple benefits can exceed the pure energy conservation effects (direct cost savings) by 250%.
“The report comes timely”, says Nils Borg, Executive Director of eceee. “Industrial efficiency is increasingly being recognised as a large opportunity, not only for climate protection, but also for increasing competitiveness. It also reflects the growing understanding that the blind faith in general fiscal incentives and the ETS can only deliver so much. Energy audits recognise the fact that decision- makers in industry are humans, and good audit schemes can help decision- makers make good decisions.”
Shifting focus from company size to energy demand
Having been in effect only a few years and with the deadline for MS implementation in December 2015, there is still plenty of evidence to draw conclusions from article 8’s first years of preparation. The new eceee review notes that Article 8 has been implemented inconsistently across Europe, despite rather clear guidelines in the EED and from the European Commission. This means that the audits deliver varying degrees of savings and associated multiple benefits across Europe. But it also means that competing industries inadvertently face an unnecessary large variation in regulatory frameworks across Europe.
In this respect, one recommendation of the report is to base the mandatory audit requirements more on the energy demand of an enterprise rather than its turnover and number of employees. This would, for instance, cover SMEs that are very large energy users.
Recommendations for Large Enterprises
With regard to large companies, these recommendations are as follows:
- Large companies should be obliged to implement recommended measures with a payback-time of up to 3 years, but the report also offers some alternative benchmarks.
- Penalties should be proportionate to the economic situation of a company and exceed at least twice the typical costs of an energy audit.
- A reporting system should be established where companies or auditors have to proactively submit aggregate data on a company level.
- Member States should be required to set up adequate monitoring systems for the implementation of measures as suggested during the energy audits.
- Large companies that intend to implement an energy or environmental management system should receive a sufficiently long period to properly set up this system.
Recommendations for SMEs
- While regular energy management systems can be too burdensome for SMEs, “light-weight energy management systems” could help to anchor a continuous improvement process for energy efficiency in this group of companies.
- Member States should be required to establish and promote a central information hub on energy audits, related best-practice and to identify energy auditors.
- Member States should be required to regularly monitor their encouragement and incentive mechanisms.
- Supporting energy audits in SMEs through energy service providers, e.g in energy saving tenders or energy saving obligations, could generate scale effects that help SMEs in accessing such schemes more easily.
The report can be downloaded from the eceee website.